Search
Close this search box.
Search
Close this search box.

,

December 21, 2023

Rental Price Regulation

INTRODUCTION

The procedures and principles regarding the determination of the rental prices of immovables subject to lease agreements are regulated in the Turkish Code of Obligations numbered 6098 (“TCO”), and the procedures and principles under which the rental prices will be determined in the renewed lease periods are stipulated in Article 344 of the TCO. In this respect, as per the Article 344 of the TCO;

“The agreements of the parties regarding the rental price to be applied in the renewed lease periods are valid, provided that they do not exceed the rate of change in the consumer price index in the previous lease year according to the twelve-month averages. This rule also applies to lease agreements with a term longer than one year.

If the parties have not made an agreement on this matter, the rental price shall be determined by the court according to equity, taking into account the condition of the leased property, provided that it does not exceed the rate of change according to the twelve-month averages in the consumer price index of the previous lease year.”

it is stipulated that the rental price to be determined between the lessee and the lessor for the new lease period cannot exceed the rate of change to be determined according to the twelve-month averages in the consumer price index in the previous lease year.
In this context, before the regulation dated 11.06.2022 entered into force, the parties were determining the new lease period rental price for the lease agreement within the framework of this Article 344 of the TCO. As a matter of fact, with the entry into force of the Law on the Amendment of the Law on Attorney and the Turkish Code of Obligations (“Law“), new regulations regarding residential leases have been issued and the parties are required to determine the rental prices in accordance with the new regulation until 01.07.2023.

REGULATIONS UNDER THE LAW

With the Law published in the Official Gazette dated 11.06.2022 and entered into force on the published date, a new regulation has been issued regarding the rental prices to be determined for the new lease period only for residential leases and it has been decided to add the following provisional article to the Turkish Code of Obligations numbered 6098.

“In terms of residential leases, agreements regarding the rental price to be applied in the lease periods renewed between the date of entry into force of this article and 1/7/2023 (including this date) are valid, provided that they do not exceed twenty-five percent of the rental price of the previous lease year. If the rate of change in the consumer price index of the previous lease year according to the twelve-month averages remains below twenty-five percent, the rate of change shall be valid. This rule also applies to lease agreements with a term longer than one year. Agreements made in excess of these rates are invalid in terms of excess amount. The provision of this paragraph shall also apply to the decisions to be made by the court pursuant to the second paragraph of Article 344.”

With this provisional article added to the TCO, while determining the rental prices within the scope of the lease agreements the lease periods of which will be renewed between 11.06.2022 and 01.07.2023;

Pursuant to the aforementioned Article 344 of the TCO, if the rate of change to be determined based on the 12 (twelve) month averages of the consumer price index of the previous lease year is less than 25% of the rental price for the previous lease period, this rate of change will be applied,

If the rate of change is more than 25% of the rental price for the previous lease period, the rental price for the new period will be determined provided that it is not more than 25% of the rental price for the previous period.

It is important to note that this provisional article added to the TCO is mandatory and in the event that the rental price for the new period is increased in violation of the procedures and principles set forth under this article, the amount exceeding 25% of the rental price for the previous lease period will be deemed invalid.

However, if an agreement regarding the determination of the rental price cannot be reached between the parties, in accordance with paragraph 2 of Article 344 of the TCO, the rental price shall be determined by the court according to equity, taking into account the condition of the leased property, provided that it does not exceed the rate of change in the consumer price index of the previous lease year according to the twelve-month averages and does not exceed 25% of the rental price for the previous lease period.

It should also be noted that the regulations introduced under this provisional article are only valid for residential leases, and the regulation that the rental price cannot be more than 25% of the rental price for the previous period will not be applicable for roofed workplace and other immovables leases.

In addition, it should be noted that the basic condition for this regulation is that the lease agreement between the parties is renewed between 11.06.2022 and 01.07.2023. Therefore, with regard to the lease agreements renewed before 11.06.2022 the Article 344 of the TCO will be applied, and the rental price will be determined provided that it does not exceed the rate of change to be determined according to the twelve-month averages in the consumer price index in the previous lease year.

Authors

Kılınç Hukuk ve Danışmanlık

Kılınç Hukuk ve Danışmanlık